Guideline on Managing Layoff / Retrenchment
Malaysian Employers are advisable to follow the following guidelines in managing layoff / retrenchment:
Cost Cutting Measures
If an employer wishes to downsize or reduce headcount, it is advisable to first implement cost appropriate cutting measures, as follow:
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Limitation on recruitment of new employees, except for critical positions;
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Limit overtime work;
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Limit work on rest day and public holiday;
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Reduce the number of shift (if applicable);
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Reduce working days;
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Reduce daily working hours;
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Conduct retraining programs for employees;
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Transfer employees to other suitable vacant positions;
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*Lay off workers on a temporary basis (temporary shut down); and
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*Pay cut for employees
*May be implemented with the written consent of employees or Trade Union representing the employees.
If all the above measures fail to achieve the desired results, employer may downsize or reduce head count by embarking on Voluntary Retrenchment Scheme (VRS) or Retrenchment exercise.
Voluntary Retrenchment Scheme (VRS)
Employer has to decide on the number of employees it wants to reduce, and which department is affected. A communication section must be held with all staff and departments concerned, to explain the reason of such VSS or retrenchment, and to clear any doubts that may arise. Staff will then be invited in writing to apply for VRS, whereby the staff shall be notified the compensation offered, usually inclusive of:
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VRS benefits based on every year of service;
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Notice / pay in lieu of notice; and
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Pay in lieu of unconsumed annual leave.
From the applications made, the employer will inform the applicants as to whether their applications were successful. Employer is then required to:
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Inform Ministry of Human Resource Department (MOHR) via PK Form on such VRS exercise one month before the VRS date.
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Ensure that Income Tax of the employee is cleared before releasing the compensation sum to him/her.
Meanwhile, employees who opt for VRS are required to sign an undertaking letter that it will be a full and final settlement with the company.
Retrenchment
Retrenchment procedures will be similar with VRS, except:
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Retrenchment shall be on Last In First Out (LIFO) basis.
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Post retrenchment obligation by the employer — In the event there arises a necessity to recruit employees for the category of employees who were retrenched, company is to give preference to the employees who were retrenched if they wish to be re-employed by the company.
Hi,
I would appreciate if you could give your advise or give your opinion on the following issue:
I work in on of the branches of a manufacturing firm. Recently, this branch, located in east malaysia was closed down and most of its employees were given the retrenchment package. However, I am one of the only two employees (the most senior emplyees) not give the package. Instead, were instructed to be transferred to its main factory in west malaysia.
My transfer causes me more adversities than privileges. The adversities include losses of family income (wife need to quit her job), discontinuation of my part time MBA course in a local Uni, financial losses as I need to pay RM16,000 for car taxes, and many more. I’ve appealed for the retrenchment package but themgn not even want to consider it. It would be like I take it or quit. Whatever option I take, I will be on the losing side. The only best option is getting the retrenchment package, and find a job locally.
Would I have a chance in court if I continue to defy the instruction and get fired?
Comment by dymas — May 30, 2009 @ 2:47 am